It’s Never Too Late to Get Financially Fit (Part 1 of 2)

March is National Credit Education Month, a time that gives you the opportunity to hone those finance skills. Or, if you’re like many Americans, learn some to begin with. Why is this topic appearing in a business skill blog on a training company's website? Because if you or your employees don’t make personal financial well-being a priority, problems and debts will quickly blow up and become an overwhelming problem. Even while they’re at work. And, because providing your employees access to good financial services and advice might be the greatest perk or benefit you can provide them as an employer. 

An Associated Press poll showed that people with high levels of stress over their finances were more likely to suffer from ulcers and digestive problems, severe anxiety or depression, headaches and migraines, plus muscle tension and lower back pain. 

The American Psychological Association describes how stress can negatively affect your health, including increasing your risk for heart attack. If you reduce the money stress in your life, it can improve your health. And maybe that knowledge will help keep your motivation high to take control of your money. We all need all the help we can get in the motivation department, right?

So who knows… if you take control of your money once and for all, all those money worries that you leave behind just might lead to improved health too!

The fundamentals of personal finance everyone needs to understand  

If you have financial issues … if you’re afraid to answer the phone or your front door because it’s probably a bill collector … or your work life is affected by all the stress, start turning it around today. It’s never too late to make significant improvements in your financial life.

Here’s some fundamental personal finance knowledge you should know:

CREDIT REPORT: It’s simple … no matter if your credit is good or bad, you should get a copy of your credit report every year at a minimum to make sure the information is accurate. By law, you can obtain a report once a year for free from the three major credit bureaus: Experian, TransUnion, and Equifax. You can get yours by going here. 

If you find inaccuracies, dispute them immediately and have them corrected or removed. It’s very easy to do for most of the things you’ll find. I went about seven years without checking my credit report and was stunned by all the wrong information that was on mine. For instance, I never lived in Maryland from 2012 to 2016, but according to my Experian report, I did.

CREDIT SCORE: The three-digit number that controls your life, especially if it sucks. Financial institutions use the three credit bureaus to verify you’re worth the risk of loaning money or opening a credit card. There are small variations in credit scores, but

	Poor	Fair	Good	Very Good	Excellent
Industry-specific FICO® scores	250 to 579	580 to 669	670 to 739	740 to 799	800 to 900

 

Six things that affect your credit score the most:

1. Amount of debt you carry—Paying off the amount you charge to your credit cards each month helps to improve this amount. Showing that you are reducing debt each month gradually increases your score over time.
2. Age of credit history—The older your credit history (and the longer it is in good standing) shows a trend toward reliable financial standing.
3. Reports to collections agencies—Any inaccurate reporting to a credit agency needs to be reported immediately. The sooner you resolve an inaccuracy, the quicker your credit report can be corrected. Obtain a letter from the collection agency once you have been able to confirm the error and submit it to all the credit reporting agencies.
4. Late payments—Any time you make a late payment, especially on a credit card or loan, this will be reflected on your credit report. Pay early, pay on time. If you use your online banking system to make payments, remember to review your banks turn-around-time for payments. Take their delays into account and schedule accordingly to avoid any late payments.
5. The number of hard inquiries for credit—If you are considering a loan for a car or house, each inquiry will be registered on your credit report. When your credit is in good standing, it doesn’t have a big impact.
6. The number of accounts—Opening and closing accounts can have an impact on your credit score. Depending on the number of accounts, the impact on your score could be huge.

Starting today, take steps to learn more about handling credit.  See what you can do to improve your credit score and gauge how you are doing.

There are plenty of places that you can get help

Instead of being embarrassed by your financial state of affairs (trust me, I know), get help starting today. I downloaded both the Credit Karma and Credit Sesame apps and ordered a copy of my credit reports from the three bureaus. Within the first 24 hours, I disputed 20 inaccuracies on my reports (TransUnion’s was brutally wrong) and got all my information current. Within the first 45 days, my score rose nearly 40 points just from doing that.

While it will take me some time to get back to my credit zenith of a nearly 800 score, there is tremendous power and confidence from just knowing that my information on my reports is accurate and being able to find out instantly if something has impacted my score. You can do the same. Starting today.

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This is part 1 of my two-part blog series on getting your financial health back during March. Check out Part two, covering five tips to get you to where you want to be with your credit and your finances no matter where you are now.